MPs criticise £2bn cost of consultants

Whitehall could save taxpayers at least £500m a year by relying on advice from civil servants rather than paying nearly £2bn a year for the "profligate" services of consultants, a committee of MPs recommends today. The Commons public accounts committee found that Whitehall departments often hire consultants before establishing whether in-house staff have the skills for the job. It called for a "more intelligent" use of consultants, echoing new advice from Sir Gus O'Donnell, the cabinet secretary, to all departments, following publication of a critical report from the National Audit Office, parliament's spending watchdog.

Public sector spending on consultants in England has risen by a third in three years, from £2.1bn in 2003-04 to £2.8bn in 2005-06, largely due to increases in spending by the NHS. Of this, central government accounts for £1.8bn. The most frequently purchased consultancy was IT and project management skills, accounting for 54% of total spending on consultants.

The all-party committee said central government was repeatedly using consultants for core skills and increasingly using a "select" list. Four suppliers each receive business worth well over £100m a year from Whitehall. The committee's Conservative chairman, Edward Leigh, said: "It is impossible to believe that the public are receiving anything like full value for money from this expenditure.

"In fact, a good proportion of it looks like sheer profligacy. The consultancy firms are truly on to a good thing."

Unions backed the MPs' findings. Mark Serwotka, general secretary of the Public and Commercial Services union, said: "These are obscene sums of money being given to management consultants with little thought of value for money.

"Rather than investing in its own workforce, the government has effectively given management consultants a licence to print money at the taxpayer's expense. You have the ludicrous situation of departments such as Revenue & Customs seeking to save £105m in the last year by cutting staff, but spending £106m on management consultants who often do the same work as civil servants."

The Liberal Democrats' shadow chancellor, Vince Cable, said: "This is a scandal which has been widely recognised for several years, but which the government has still done nothing about. It is very clear that the excessive use of consultants is driven not merely by laziness but by the excessively close relationships between some government departments and the consultancy industry.

"We need greater transparency so that once consultancy agreements have been reached the details are published and not hidden behind commercial secrecy."